THE GREAT AFRICAN RAILWAY

Expanded rail operations promise to ignite intra-African trade

Now, more than ever, it is time for African countries to trade among themselves—and railway is going to lead the way. This is according to South African Finance Minister, Malusi Gigaba, who argues that Africa needs to augment intra-regional trade volumes and identify new emerging markets.

Speaking at the close of the World Economic Forum Africa (WEFA) held recently at the Inkosi Albert Luthuli International Convention Centre under the theme of “achieving inclusive growth”, Gigaba said that “African countries need to identify new markets to focus more on trading with one another, identify markets in emerging economies and trade with those countries that are still open to trade.”

Acknowledging that global opportunities for African countries were frequently coupled with risks, Gigaba said that, overall, “we need to take a positive outlook and focus on what we need to do in order to grow our economies to sustain the growth over the medium to long term.”An important key to unlocking regional growth is infrastructure. As Gigaba commented at a Black Business Council breakfast roundtable held in Durban in conjunction with WEFA, poor infrastructure continues to undermine intra-continental trade.Africa has an estimated infrastructure backlog of some US$100 billion per year and there is financing available for only half of this.The way to deal with the problem is for African countries to mobilise domestic savings, capital markets and invest in deals on the continent.“Africans must not expect others to invest in what we, ourselves, are not ready to invest in. Our capital resources may by limited, but they are not insignificant. We need to mobilise our domestic savings and capital markets to invest in deals on the continent,” he said. “We need infrastructure, which supports industrialisation, the beneficiation of minerals and the delivery of basic services to our people. We need social infrastructure to support a globally competitive education system such as schools, universities and housing for students.”

Transport infrastructure is a particularly vital topic. A long history of under-investment and exploitation has resulted in a situation where Africa’s roads and railways do not serve Africa’s intra-regional needs. On the contrary, they were largely designed and built for the purpose of facilitating the transportation of raw minerals and resources to external markets.That is why intra-African trade is languishing at a paltry 11%, whereas intra-Asian and North American trade are both sitting at 40%, while in Europe “intra-continental trade sits at an impressive 60%, thus mobilising capital to build economic infrastructure. Unlocking industrial activity, intra-Africa trade and growing Africa’s share of global trade is crucial for Africa’s development,” commented Gigaba.

Corridors of economic power

Minister Gigaba’s views on the importance of transport infrastructure are supported by international research. In particular, cross-border road and rail infrastructure is widely held as a prerequisite to building regional economic development corridors, which can, in turn, unlock socio-economic opportunities and promote sustainable development on the African continent.Of course, in Africa, the most important part of sustainable development is job creation, which is something cross-border transport infrastructure can help deliver in spades.

A recent paper entitled, “The Development Potential of Cross-Border Infrastructure in Africa: A Job Creation Perspective”, by Niklas Malchow and Anna Waldmann, sums it up: “A transport corridor has the potential to revitalise existing regional markets, create new ones, and support the establishment of value chains through commercial and service hubs along the corridor. This can lead to higher intra-African trade and efficiency gains, eventually promoting economic diversification on the continent and allowing African economies to become industrialised middle-income countries.”Once the process gets going, it exerts an economic snowball effect. According to Malchow and Waldmann, “When a regional transport corridor becomes operational, its road, rail, and port infrastructure triggers spill-over effects that can catalyse a comprehensive process of regional socio-economic development. In economic theory, as transportation costs decrease, traffic increases, and as a result, trade in goods and services intensifies. Due to lower trade barriers and enhanced market opportunities, new commercial and service hubs are established along the corridor.On the one hand, regional transport corridors can incentivise the creation of new businesses, and on the other hand, they can also connect existing manufacturing and agricultural clusters to new cross-border markets. Likewise, feeder roads can link agricultural areas with the manufacturing sector, similarly creating the potential for new value chains. The new corridor can, thus, generate substantial competitiveness and productivity gains, create new economic opportunities and, ultimately, lead to an increase in national and regional GDP."

Leading operator

Acting on similar insights, Transnet, Africa’s largest freight operator on the African continent, is actively seeking out commercial opportunities throughout the continent—particularly in Senegal, Liberia and Nigeria, as well as Ghana, Togo, Benin, the Democratic Republic of Congo and Kenya.

This was disclosed by Public Enterprises Minister, Lynne Brown, speaking under the auspices of WEFA. Brown added that “these include possible joint ventures in areas such as rail and port opportunities; the development of infrastructure at ports and establishing transport corridors in those countries.“Transnet is not only committed to developing infrastructure but their presence must also change the socio-economic conditions of those living close to these projects. The company must also, as far as possible, procure locally and develop small, medium and micro enterprises in those countries,” added Brown. Transnet has been operating under its Africa Strategy since May 2015, with a mandate to develop and pursue commercial opportunities in conjunction with other state-owned companies and the private sector, in a bid to diversify revenue sources. The strategy holds the promise of opening up Africa’s 15 landlocked countries by affording them access to ports.“If we can address Africa’s logistics infrastructure deficit, we can change the quality of lives of all Africans. And we look to Africa as a key, underdeveloped market,” said Brown. “In 2015, intra-African trade accounted for less than 18% of the total continental exports. Among the key factors underpinning these numbers is Africa’s logistics infrastructure deficit.”The World Bank Logistics Performance Index ranks only six African countries in the top two categories, with 18 classed as “partial performers” and 22 marked as “logistics unfriendly”.

Born and bred in Africa

In addition to branching out across the continent, Transnet has continued to make impressive strides with its own original equipment manufacturing endeavours. Recently, the behemoth of the railways celebrated the launch of its first-ever independently designed, engineered and manufactured locomotive.

Custom-made for African conditions, the Trans-African Locomotive is intended for use on branch lines and in shunting yards. A particular feature of the locomotive is its light weight, which makes it ideal for most main lines in the SADC region, where the state of the infrastructure precludes the use of heavier, more cumbersome locomotives. Transnet designed the original underframe, superstructure, bogies, body and locomotive control system.Speaking at the launch, President Jacob Zuma hailed the locomotive as a significant technological breakthrough by Transnet and South Africa.“We appreciate Transnet’s drive to become the leading provider of logistics services in sub-Saharan Africa. We must continue working hard to develop infrastructure that promotes trade among African countries and which makes it easier for us to visit one another and also boost economic growth and development.“The Trans-African Locomotive project has provided an opportunity for Transnet to grow and diversify its business,” he said.Minister Brown expressed Transnet’s pride in the Trans-African Locomotive, the first locomotive to be born and bred in Africa. “Those of us at the shareholder ministry, together with the Transnet board and Transnet management, are continually considering new initiatives and innovations to reshape the core of the Transnet business,” she said.

Decline and fall

While Transnet has been making impressive strides across the continent, the Passenger Rail Agency of South Africa (PRASA) has not been doing quite so well, with the notorious purchase from a Spanish manufacturer—at a cost of R600 million, and despite the warnings of PRASA’s own engineers—of the Afro 4000 locomotives deemed by the Railway Safety Regulator (RSR) to be “at times too high” for South Africa’s operating conditions.

In August 2015, a train hauled by an Afro 4000 locomotive, travelling from Johannesburg to Cape Town, derailed on its way through Kimberley, in the Northern Cape.In an effort to render the locomotives serviceable, PRASA has tried to lower them. Transport Minister, Joe Maswanganyi recently inspected the locomotives at PRASA’s Braamfontein depot. The Minister, whose mandate is to deliver efficient, reliable and safe trains to the South African public, said that both PRASA and the RSR assured him that the challenges can be resolved, adding that “as the Minister of Transport, what I am interested in is that the sooner the issues get resolved and people get transported, the better. There is a huge demand from the South African public that they want the trains to get onto the tracks as soon as possible.“Somehow, we’ve been failing them with the delays and shortage of trains, more especially in the Western Cape where passengers end up vandalising our trains, which we discourage in the strongest terms. The sooner the challenges are resolved, the sooner we see the trains transporting our people,” he said. Ten of the Afro 4000 locomotives were intended for use on commuter runs from Port Elizabeth and East London in the Eastern Cape, where PRASA had been forced to hire diesel-electric locomotives from Transnet Freight Rail, with the rest allocated to six Shosholoza Meyl intercity passenger routes.

Disastrous management has caused PRASA’s mainline passenger service to be characterised by late departures and arrivals, cancellation of trains without notice, passengers being left stranded by breakdowns, poor maintenance of rolling stock, and onboard service that is lax at best. Shosholoza Meyl mainline passenger services dwindled from three million a year in 2009/10 to less than one million in 2014; the number of trains operated annually dropped from 6 000 to 3 000.PRASA is also credited with helping Cape Town claim the place of the most-congested city in South Africa, as commuters abandon the once-reliable passenger rail service and take their chances on the streets. However, the congestion may be alleviated in future, according to the website Future Cape Town.“Transport for Cape Town (TCT) and the Passenger Rail Agency of South Africa (PRASA) have signed a memorandum of action that will assist the city in addressing an investment strategy aimed at integrating all modes of public transport in the city. One of the infrastructure investment projects that have been prioritised is the new Blue Downs rail line to be built from Nolungile to Kuils River stations, to be operational by 2020. The proposed design for Blue Downs is a two track 11.5km line, which will affect about 50 000 commuters. It also coincides with the National Treasury’s allocation of more than R120 billion to invest in commuter rail networks operated by Metrorail,” said Future Cape Town.